Thursday 7 February 2013 08.20 EST
First published on Thursday 7 February 2013 08.20 EST

Google has overhauled its AdWords advertising network in an attempt to reposition the multi-billion dollar service for the smartphone age.

The changes will make it easier for advertisers to target mobile users searching Google from their smartphone or tablet computer.

AdWords contributed the bulk of the company's $43bn (£27.4bn) advertising revenues last year, but has yet to take full advantage of the boom in internet searches on the move. The number of daily Google searches from mobile devices is expected to surpass daily desktop searches, from PCs and laptops, by next year.

Google's senior vice president of engineering, Sridhar Ramaswamy, announced the changes in an official blogpost late on Wednesday. "People are constantly connected and moving from one device to another to communicate, shop and stay entertained," he said.

"And there are many more digital screens and devices to come, with the lines between them continuing to blur."

AdWords works as an auction in which advertisers bid to place ads next to specific Google search results. The new system, dubbed "Enhanced Campaigns", will require advertisers to pay for ads on some mobile devices, such as tablet computers, for the first time.

Google said that the changes will give advertisers greater control over how much they spend on targeting mobile users at different times and locations, instead of having to "cobble together" a campaign. Previously, companies had to create multiple ad campaigns as part of a process Google admitted was "complex and time-consuming".

"With enhanced campaigns, instead of having to cobble together and compare several separate campaigns, reports and ad extensions to do this, the pizza restaurant can easily manage all of this in one single place," said Ramaswamy.

"Enhanced campaigns help you reach people with the right ads, based on their context like location, time of day and device type, across all devices without having to set up and manage several separate campaigns."

For example, a cafe will now be able to bid 25% higher for people using their mobile half a mile away to search for "coffee" or "breakfast". They will also be able to bid less for mobile searches after 11am, when it is less likely that people will want breakfast.

Reaction to the changes has been positive, with analysts saying that smaller businesses are likely to be the biggest beneficiaries.

Jon Myers, the European commercial director for digital ad firm, Marin Software, said advertisers who had separated campaigns for mobile and desktop users would lose out, but those that did not would benefit.

"The move has pros and cons for advertisers and agencies. On the plus side, this makes mobile campaigns a lot easier to set-up and manage. This will be particularly helpful for smaller businesses who haven't necessarily had the resource to separate and build out search campaigns in the mobile channel," he said.

"However, those companies who had already separated out mobile and desktop campaigns, will now have less visibility and control over their mobile campaigns."

To contact the MediaGuardian news desk email editor@mediatheguardian.com or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000. If you are writing a comment for publication, please mark clearly "for publication".

• To get the latest media news to your desktop or mobile, follow MediaGuardian on Twitter and Facebook